Lastest news

Ethics and Governance

How can charities, especially smaller ones, deal with the many challenges they are currently facing? Kathya Rouse identifies key areas where accountants may be needed to help charity clients. Like everyone else, charities are struggling to come to terms with their new normal. The unprecedented situation we find ourselves in, and uncertainty around the short-term outlook, makes planning for the future exceptionally difficult. Some charities are continuing to provide ongoing services, while other charities are operating limited or no services due to the current government restrictions. It seems likely that some level of social distancing will be in place for some time and many charities will need to come up with new ways to continue/recommence providing their services while adhering to the relevant government restrictions. Amid all this uncertainty, how can we, as accountants, help? Many smaller charities do not have the expertise among staff or trustees to deal with many of the challenges they are being faced with. We are more than “just” accountants to these clients – we are their trusted business advisors who can be relied on to provide independent advice. I have identified a few areas where you may be needed to help your charity clients: Provide a sounding board and listen to their concerns Despite many similarities between charities, each one will have different requirements right now, so aim to provide a bespoke solution for each charity.   Encourage them to develop a contingency plan to guide them through planning for their organisation during the life cycle of the current pandemic There are various free templates and guidance issued by some of the main charity sector support organisations, such as The Wheel and The Carmichael Centre, which you can direct clients to. The contingency plan should be a live document which remains under regular review. Advise charities around their governance requirements and their AGM There is conflicting advice around whether AGMs can be held entirely virtually under company law except where specifically allowed by the company’s constitution. You can play a key role in helping the charity figure out its position re quorum and use of proxies to overcome this hurdle. Get involved in the budgeting process Budgeting has never been more important, and you can provide your expertise through assisting in, or reviewing, the budgeting process. Like the contingency plan, the budget should also be a live document updated regularly. Empower the trustees Empower the charity trustees to make decisions around whether they can use their current accumulated reserves to make up for a temporary deficiency in resources by assisting them to ascertain their restricted and unrestricted funds. Stay up-to-date Ensure you stay on top of the various funding streams available to charities, such as the Temporary Wage Subsidy Scheme and the new €40 million COVID-19 support fund, and make sure to keep your clients abreast of any available funding. Keep up to date with ongoing regulatory, professional and other guidance which may be of use to your clients. Chartered Accountants Ireland have collated a list of various guidance documents which are available on its website and is open to everyone, not just members. Make use of any reputable free resources available to you and your clients. Kathya Rouse is a Partner at McMoreland Duffy Rouse and a CA Support Board member.

May 14, 2020
News

In these uniquely challenging circumstances, how can accountants support non-profits? Patricia Quinn and Paula Nyland tell us that thoughtful and clear-eyed planning is needed to mitigate the challenges facing these organisations. Stories from the non-profit sector can paint a bleak picture of services threatened, vulnerable people at risk, fundraising decimated, and mature non-profit businesses facing unprecedented challenges to their viability. The emergency €40 million funding package provided by Government for the non-profit sector will go a ways towards buying some much-needed time, allowing these non-commercial businesses to take stock, regroup and renew their operations. If you look at the thousands of non-profits listed on Benefacts public website, you can see that the sector is highly diverse. At one end, there are heavily staffed health and social care service providers that derive most of their funding from the State in exchange for providing essential services. At the other end, there are thousands of small, local associations and clubs that rely mostly on donations and volunteer effort. These are uniquely challenging circumstances for non-profits and accountants have an important role to play in supporting them – whether as professional advisors or as voluntary Board members. As analysts of sector data, these are the kinds of situations Benefacts has encountered: Dependency on fundraising and donations is high, with almost €0.9 billion reported in the most recent financial statements of all the companies in Benefacts Database of Irish Non-profits. The pandemic has decimated traditional interactive fundraising in its many forms – whether event-driven, church gate collections or calling to homes to sign up to direct debits. Some high-profile campaigns have mitigated this, such as Pieta House, which raised €2 million after a push on social media, but this is only a third of the €6 million raised by last year’s ‘Darkness Into Light’ walk, with no alternative project to fill the €4 million gap. Online fundraising simply does not have the same impact. Many non-profits do not hold an adequate level of reserves. A good rule of thumb accepted by some Government funders is 10 weeks of operational expenditure. Sadly, few non-profits enjoy this level of security. In fact, many Government funders actively discourage the holding of reserves, with the result that several non-profits operate a ‘hand-to-mouth’ existence in terms of cash. Although the cost base of larger non-profits reflects the labour-intensive nature of their work, Benefacts analysis shows that in the case of many smaller non-profits (i.e. less than €250,000), non-payroll expenditure amounts to some 70% of their cost base. This means the COVID-19 subsidy will be of limited value. The demand for services is higher, and the costs of delivery will increase with the cost of delivering care with social distancing restrictions still active. This will have far-reaching effects in homelessness services, respite, residential care, and many more service areas dominated by non-profits. In the voluntary housing sector, income support payments have helped maintain rent payments but, without a further injection of funding, it will become harder to meet the demand for housing given the likely consequences for the coming recession for the building sector. Inevitably, the current focus is on the immediate issues, but for the medium-term, thoughtful and clear-eyed planning will be needed. Directors and trustees need to be looking at cash flow projections, potential increases in demand, and commitments to continued government support. Without this, sector leaders are telling us that tough decisions may be needed to cut services as early as Q3 2020. Although the emergency fund is very welcome, many organisations will need an early commitment of future government funding into 2021 and beyond to maintain essential services. The alternative could be closures, with all the unthinkable consequences for the most vulnerable in our society.   Patricia Quinn is the Managing Director of Benefacts. Paula Nyland is the Head of Finance at Benefacts.

May 14, 2020
Ethics and Governance

How can charity trustees continue to safeguard charities during this tumultuous period? Michael Wickham Moriarty gives us three top tips on how to safely guide your charity through these uncertain times. The COVID-19 crisis has now been impacting Irish charities for at least two months. What should charity trustees be doing for their charities now and for the future? Keep meeting, but be flexible Board and committee meeting schedules may have been disrupted, or even paused, during the introduction of restrictions in March and April. This is entirely reasonably as management focused on facilitating remote working and core business continuity during the initial stages of the crisis. If meetings have been on hold, look to restart them now. All the governance functions of charity trustees are just as important during this crisis as they are during normal times. Undoubtedly, the agendas and board calendars will need to shift to focus on business continuity, crisis management and other COVID-19 related risks. All meetings should be remote rather than in-person. They may take place at different times to facilitate either board or management. Some meetings for board and committees may be called at short notice as the charity responds to a rapidly changing situation. The papers prepared by management may be less polished and punctual as the executive team focuses on crisis response. Going forward, charity trustees should continue to meet and focus on their core governance roles of strategic direction, oversight and risk management. Think of all stakeholders Given the serious impact of COVID-19, management may focus their energies and attention on specific stakeholders or critical areas. Charity trustees should ensure that all stakeholders are considered during the crisis. For example, the management team may be focused on serving and protecting their vulnerable beneficiaries without giving sufficient attention to staff welfare, including their own. In many charities, the funding and financial crises could take all the attention away from the critical work of the organisation. Institutional donors are a stakeholder that can dominate the attention of charities, but many of these funders are currently being flexible with their grants, allowing charities to focus on other stakeholders. Trustees should ensure due consideration is given to the needs of all stakeholders, as well as organisational sustainability. Be a critical friend to management Most charities are dealing with multiple complex risks with a high-level of uncertainty over the future operating context for funding, staff and beneficiaries. This level of uncertainty is likely to persist for the remainder of this year and beyond. Charity trustees must always balance their relationship with management between challenge and support. As a trustee, you may have access to networks, expertise and experience not available elsewhere within the charity. Use this information to test the assumptions that management use for their COVID-19 response plans. Examine the scenarios and decision points set out. This trustee perspective can really add value as you collaborate with management in agreeing how to chart your charity’s path through these unprecedented times. Good luck! Michael Wickham Moriarty FCA is a Governor and Vice-President of the Rotunda Hospital, and he is the Director of Corporate Services of Trócaire.

May 13, 2020
Strategy

How can business leaders and entrepreneurs take pole position after COVID-19? John Stapleton explains how they can thrive in uncertain times and drive competitive advantage from the emerging new normal. The Irish Government issued its Roadmap for Reopening Society & Business over a week ago. So, Ireland has a plan. Sometimes plans raise more questions than answers – but it is a plan nonetheless and a lot more than many other European countries have in place. For business leaders in general, particularly entrepreneurs, any form of a plan is a good thing. A plan delivers clarity. A plan removes (at least some) uncertainty. This plan comes with lots of caveats (e.g. that infections and death rates remain under some degree of control) but businesses can at least now figure out some scenarios of how to prepare for recovery and re-instigate their businesses given the enforced eight-week hibernation. I can imagine financial directors and controllers up and down the country have been pumping out spreadsheets outlining scenarios ‘X,Y,Z,’ given the different effects the lockdown relaxations will have on their particular business and how quickly they can take advantage of the new business and market ‘freedoms’. While some industries have been more affected than others, all our feeling the impact of COVID-19. My industry is food and drink. Many think this has been booming during COVID, but it depends on your route to market. If you supply food service (e.g. hospitality/restaurants/events), you have been in a very deep hibernation. If you supply retail, it is a mixed bag. It’s all going to be a different story for each business across all sectors. One thing for sure is business will not return – ever – to what it was like in January or February. Everyone’s behaviour has been significantly and suddenly affected. While the rules are about to relax and, with them, our behaviours, many new attitudes will stick, at least in part. Just like empty retailer shelves in March were not really driven by panic buying, but rather by every shopper placing a few extra items in their basket (because everyone was cooking at home significantly more). This shows that a slight shift in behaviour by many people can have a profound effect; ultimately, we all need to figure out what this means for our industry and our business going forward. Working within the new normal One thing that unites all entrepreneurs, however, is that we are used to adversity. We court adversity – even in the good times. Entrepreneurs also tend to be quite good at seeing the opportunity in uncertainty and turning that uncertainty into competitive advantage. The status quo favours the corporate, who has the resources to drive efficiencies and growth in more certain and predictable times. Entrepreneurs are much more agile and can react and take advantage of new market forces. The real trick for entrepreneurs now is to understand what is coming round the corner – to begin to define the “new normal”. How many people will continue to work from home – just one day per month more than they did before? How many people will continue to work out at home to something they streamed on YouTube in the last few weeks? How many businesses will decide they don’t need such a large, swanky office in the centre of town and down-size, move to the suburbs or decentralise? How many businesses will reduce travelling to physical meetings and move to web-conference? Do you really need to physically be at that quarterly meeting in New York, or will an annual visit do just as well while the rest are held on Zoom? You only need many people doing a few of these things 5% of the time to move to a “new normal”. These days, I work with a range of small, early-stage businesses. My message to them is that the Government’s plan is great (and it is great), but the Government doesn’t run your business. That’s your job. This is the time to take control of your business’s destiny. Take the time to define what the “new normal” means for your industry and position yourself to take best advantage of this shift. Entrepreneurs are agile, so play to this strength. Entrepreneurs thrive in uncertain times, so take the opportunity this presents to get to into pole position to be able to kick on purposefully and drive competitive advantage from the emerging new normal. You don’t need to be the best in the world; you just need to be better than your competition (who haven’t recognised the new normal yet). John Stapleton is an entrepreneur and speaker. He is also a business adviser for Bord Bia.

May 08, 2020
News

As exit plans for the COVID-19 lockdown start to emerge, businesses need to focus on how best to manage the ‘new norm’, says Teresa Campbell. Remote working became normal for thousands of office workers in recent weeks as businesses turned to modern technologies to continue operating during the COVID-19 lockdown. As restrictions are lifted, a priority for businesses in the coming months will be to provide a safe environment for employees and customers. However, it will also be important to not lose sight of the overall culture within the business. Undoubtedly, the quick shift to remote working has caused anxiety within workforces. The right culture within a business needs to embrace this change, recognise the new challenges employees are facing and provide the right level of support and encouragement. As working from home is likely to continue, at least for some workers, this will be a new challenge for businesses whose culture up to now may not have involved managing remote teams. Good communication will be more important than ever with regular check-ins between managers and their teams. Team engagement mechanisms will also be needed – for example, virtual team meetings, virtual coffees and other social interactions. This is important to ensure that staff do not feel isolated and everyone feels part of a team. While technology is the key enabler of remote working, it also presents risks that need to be identified and managed. Homeworkers may be targeted by cybercriminals seeking to gain access to an employer’s network, routers may be attacked, data may be compromised, or video conferencing security may be breached. IT teams will likely need additional resources to protect data, defend against cybercrime and ensure policies are up-to-date and communicated to staff. Returning to the workplace Employees may feel anxious about returning to work while there are still cases of COVID-19 in the community. Employers will need to be sensitive to these concerns and put procedures in place for a phased return of staff. At a practical level, office spaces may need to be reconfigured to accommodate physical distancing between workstations, in meeting rooms and common areas like canteens and coffee stations. Perspex screens between workstations may need to be installed along with hand sanitising stations. Staggering return dates and working hours may also be necessary, depending on operational needs.  Looking to the medium- and longer-term, businesses may need to move away from open plan, accelerate the adoption of new technologies, and introduce processes such as thermal screening to monitor employees and visitors and keep workplaces safe. Changeable working environment Retaining culture within the “new normal” workplace will have to recognise that the new working environment will be a mixture of home, office and online. Interacting with staff through the use of collaborative tools, supporting staff with more flexible work patterns, and communication practices will all be key to enable staff to adapt their personal work structure and routine, which will ultimately be productive and effective. The most successful businesses will adapt quickly to the new norm and the challenging demands COVID-19 presents, by putting measures in place over the coming days and weeks, positioning their business to respond faster than competitors to the rise in demand, once restrictions are lifted. Teresa Campbell is the People and Culture Director at PKF-FPM Accountants Limited.

May 08, 2020
News

Business is never going to be the same after COVID-19. How can we prepare for the aftermath? Eamon Murphy offers us lessons to cope with the future ‘new normal’. I was working in Milan when the authorities announced the lockdown of a few small towns in the Lombardy and Veneto regions in late February. The action was designed to prevent the spread of the virus to the industrial north of the country and beyond. It was a sunny Sunday afternoon and the square outside Milan’s famous Il Duomo cathedral was filled with tourists (some masked) and well-fed pigeons. The Milan fashion week and three Serie A matches had just been cancelled. I did not feel that I was sitting in a front row seat watching the start of a pandemic outbreak, but I was. Since then, I have returned to Ireland and have witnessed how this most democratic, pernicious virus has planted itself among us without any sign of leaving. Governments around the world have struggled to respond to the scale of the health and economic collapse. It is a wartime endeavour with the frontline shifted to attack the most vulnerable ­­– the elderly in nursing and care homes and those who are already dealing with health concerns. The economic impact has been swift and brutal. Thriving enterprises have seen turnover fall to zero overnight. In Ireland, the numbers dependent on state support has rocketed to over one million. All conventional economic forecasts have been jettisoned in favour of scenarios – educated guesses as to how bad the deficit, unemployment and contraction might be. This is where we find ourselves in early May – just two months after the first tentative Italian lockdown. We are unsuspecting innocent travellers who find ourselves caught up in this terrible car crash of history. As professionals in business, we have no choice but to confront our historic appointment. There will be a post-COVID phase and it’s time we prepare for our ‘new normal’. I have been working remotely for the past few months and would like to offer the following lessons from lockdown: Do not assume that your business post-COVID future will be just like it was in the past. Events of this scale always leave behind great change. Even if you think your business will not change, your customers and supply chain will. Act now. Do not wait for the crisis to end. Normal business rules have been suspended. Be bold, imaginative and innovative. Create your own future. ("What did you do in the Great War, Mr Joyce?" "I wrote Ulysses. What did you do?") Help is available. Maximise assistance from the Government schemes and agencies – wage subsidy, unemployment support, Strategic Banking Corporation of Ireland loans, Sustaining Enterprise fund and financial planning grants. Find someone to talk to. Cash trumps everything. Forecast early and often. Remote working works. Trust your staff to work from home. (Right now, you may have no choice). Ask yourself if you really need all that office space when this is over. Online meetings are not the same as in-person meetings. They are filled with peril for wafflers and the unprepared. We miss the social interaction cues. These meetings require more than an effective broadband and technology. Above all they need an effective chair with excellent listening skills. Go online and find Andrea Bocelli singing on Easter in the empty Duomo di Milano. Soul music. Eamon Murphy is a member in business and of Chartered Accountants Interim Managers.

May 06, 2020